1. Flows of capital

• Global flows of capital in 2012:

  • most signifcant flow = USA and Canada ($1 trillion) and W Europe
  • closely followed by NE Asia and Africa
  • little trade in Aus > $0.05 trillion
• What does capital flow include?

  • includes all money that moves between countries which is used for investment, trade or production
  • 1986 > the UK 'big-bang' opened up the UK to international stock exchange, 100 year old banking instis got bought out and replaced e.g. Midland bank was bought by HSBC
• Flows of capital in the global system > the core-periphery model after Frank and Wallerstein, 1970s

  • core regions = rich, developed nations
  • periphery regions = poor, less developed

  
• Major flows that occur between 4 main groups:

  1. Core regions > wealthier, developed HICs > powerful
  2. Periphery > less wealthy, developing with less power
  3. The International Monetary Fund (IMF) > aims to foster a global monetary cooperation with secure financial stability, high employment and trade while reducing poverty
  4. The World Bank > global insti that gives out loans for development or relief
• The semi-periphery:

  • not all countries fall into core or periphery categories, modern day versions of the model now include semi-periphery
• The semi-periphery > countries soon becoming core > BRIC's:

  • countries that developed rapidly through 1990s and 2000s
  • Brazil
  • Russia
  • India
  • China
  • South Africa
• The semi-periphery > countries soon becoming core > MINT:

  • developed more recent in 2010s
  • Mexico
  • Indonesia
  • Nigeria
  • Türkiye
• The semi-periphery > countries soon becoming core > CIVETS:

  Columbia

  Indonesia

  Vietnam

  Egypt

  Türkiye

  S Africa
• Global remittance flows:

  • transfers of money across national boundaries by migrant workers
• Some of the top 10 global remittance flows:

  • US sends $23 bn to Mexico
  • US source largest > $120 bn sent from US to other countries
  • $23 bn sent from UK to other countries
  • US to China > $13.5 bn
  • US to India > $10.8 bn
• EXAMPLE: Somalia > importance of remittances in Somalia:

  • 40% of Somalians rely on rem to meet basic needs
  • support econ development > 50% GNI and 80% of all investment
• EXAMPLE: Somalia > why did many foreign companies withdraw their electronic money transferring service to Somalia in 2011?

  • lack of anti-money laundering laws
  • lack of due diligence
  • informal economy
  • some of the money was falling into hands of terrorist ground > many agencies withdraw services and protests organised by human rights groups supporting Somalians